Thinking about becoming a home owner this year? (Perhaps you want to nab the $8,000 first time home buyer tax credit.) If so, take a deep breath and prepare yourself financially and mentally for a rewarding, but challenging, experience. Whether you’ll be buying this month or next year, here are five things you really need to know about buying a home. While you’re at it, check out our mortgage information resource center where we provide more in depth information about becoming a home owner.
#1. Real Estate Agents and Mortgage Brokers Don’t Work For You
Real estate agents (even buyer’s agents) and mortgage brokers will tell you they are your best friends in the home buying process and that they’re on your side. They’re not. They don’t work for you; they work for themselves. They both get paid almost exclusively on commission. The more you pay for your house and the higher your mortgage rate, the more they take home. I’m not saying that real estate agents and mortgage brokers are going to scam you—many will work with you and help you into the right home and the right mortgage—but you do need to understand how they get paid and understand your limits. Don’t allow yourself to be pressured into a home—or a loan—outside your budget.
#2. Don’t Spend All Your Cash on a Down Payment
Having a down payment saved—hopefully 20%—is more important than ever to qualify for the best mortgages. That said, it’s unwise to spend everything you have just to get into your home. If you do spend all your cash on the down payment, you’ll have a house, but nothing left to make improvements, fix things if they break (and believe me, houses break), or even make your mortgage payments if you lose your job or face other expenses. Keep your down payment savings and your Get no obligation mortgage quotes online. Are you a new home owner? What other advice would you give to others consider buying their first home?